Europe Is Finally Turning Around For GM And Ford

Getty Images / Alexandra Beier
Both GM and Ford reported second quarter earnings today, and while the General slightly missed expectations and the Blue Oval notched a beat, an interesting subplot was that both companies are starting to see their European business pick up.

Ford managed a quarterly profit in Europe for the first time in three years. This was an important milestone for the company and newly minted CEO Mark Fields, who took over from the extremely difficult act to follow known as Alan Mulally (he basically saved Ford prior to the financial crisis). Ford has always taken Europe seriously and is trying to bolster its global competitive position relative to GM and foreign rivals like Toyota, Volkswagen, and Fiat.

GM's misadventures across the pond are more complicated. Last year, it pulled the plug on Chevrolet in Europe, with the hope that its could shift market share to Opel, a brand that the automaker nearly jettisoned in the aftermath of its bailout and bankruptcy in 2009 (Hummer, Pontiac, Saturn, and Saab were sent packing, however). Even before this year's massive recall — 30 million vehicles and counting — GM's European operations were dragging on the company's full recovery.

So, on GM's earnings call today, it was encouraging to hear CFO Chuck Stevens change his European outlook from "break even" to "profitable." O.K., it may take 10 years to get there. But there's light at the end of the tunnel, although it's a pretty long tunnel.

CEO Mary Barra also highlighted GM's flickering Euro-recovery. Market share for Opel and its British sibling, Vauxhall, rose in eleven European markets. And the Opel Mokka is, Barra said, the bestselling SUV in Germany (thanks to the industry practice known as "platform sharing," it's known to Americans as the Buick Encore).

Even though business looks better for GM in Europe, the company is far from free of troubles: South America, as Barra said on the call, is "very challenging." Venezuela in particular is generating some major headaches.

Ford is also having issues there, so we'll have to see if the carmakers' South America problems go the way of their problems in Europe or get worse in the second half of 2014.